TaxTMI 
TaxTMI 
2020 (12) TMI 931
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....impugned proceedings u/s 147 of the Act, b. upholding the issuance of notice u/s 148 of the Act by assessing officer having no jurisdiction upon assessee. c. upholding the impugned reasons recorded by the non-jurisdictional AO u/s 147 of the Act. 4. Under the facts and the circumstances of the case and in law, the Ld. CIT(A) is not justified in upholding the impugned addition of Rs. 3,28,35,754/- u/s 50C of the Income-tax Act, 1961. 5. Under the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred: a. in taking cognizance of the report of the DVO and in considering the computation/valuation made by the ld. DVO in its report, b. in not considering the objections of the Appellant against Ld. DVO report. c. in not providing adequate opportunity of being heard to the Appellant. 6. Under the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in levying interest u/s 234A, 234B and 234C of the Act. 7. The appellant company craves leave to add, amend and modify all or any ground of appeal on or before the date of hearing." 2. The hearing of the appeal was co....
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....ugned assessment order that the assessment order would be modified as per the report of DVO after receipt of the same. 5. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions as well as material placed on record given part relief to assessee on merit and dismissed the grounds of proceedings being without jurisdiction and upholding the impugned addition made u/s 50C of the Act on the basis of report of Ld. DVO. Against the impugned order of the ld. CIT(A), the assessee has preferred the present appeal before the ITAT by taking the grounds mentioned above. 6. Grounds No. 1 and 2 of the appeal are interlinked and interrelated and relates to challenging the order of the ld. CIT(A) in upholding the assessment order without jurisdiction, therefore, we have decided to adjudicate these grounds by this consolidated order. The ld AR appearing on behalf of the assessee reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the ld. CIT(A) as well as before the ITAT. The submissions of the assessee according to the written submissions are re....
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....15). 8. Without prejudice to above, impugned reasons were recorded on the basis of information from sub-registrar or AIR/CIB data which was available with department well before the processing of return u/s 143(1) as well as at the time while notice u/s 143(2) of the Act for verifying return could have been issued. Thus, said information per se is not tangible material for formation of belief to assume jurisdiction u/s 147 of the Act. 9. Proceedings were initiated on factually erroneous and non-existing facts that Appellant filed the return but did not show capital gain income as alleged in impugned reasons. In the ITR, capital gain income has been declared. Mentioning of the erroneous and wrong fact that Appellant did not declare capital gain income in his return of income, also establishes that there had not been any examination of material available on record, including the return of income by AO recording reasons. Impugned reasons based on non-existing facts shows non-application of mind of authority recording reasons. 10. The impugned reasons are based on non-existing facts, which are not sufficient to invoke jurisdiction u/s 147 of the Act. Reliance....
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....sessment proceedings in fair way, it is necessary to provide the reasons recorded with the Appellant. Reliance in this regard is placed on judgment in case of Mithlesh Kumar Tripathi vs. Commissioner of Income-tax reported at 280 ITR 16 and CBDT circular bearing no. 14 (XL-35) dated 11.04.1955, which requires the assessing authority to be best advisor and guide to Assessee. Therefore, even if reasons were not asked by Assessee, this does not authorize AO to not provide the same to Assessee during assessment proceedings. Even otherwise, AO is not authorized proceed to make assessment on non-est and void proceedings as very notice u/s 148 was issued by ITO ward 2(3), having no jurisdiction. 16. In addition to the above, when the reasons recorded were provided during the appellate proceedings, then on the bare perusal of the reasons it is evident that reasons are not inconsonance with the law, erroneous and bad in law on the following counts: 1. The said reasons were recorded by incompetent officer having no jurisdiction upon Assessee 2. The information available in AIR/CIB data was already available with the department at the time of original proceedings, h....
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....e proceedings. 9. As per the provisions of Section 124(3) of the Act, it has categorically been mentioned that no person shall be entitled to call in question the jurisdiction of an A.O., where he had made a return under Sub-Section (1) of Section 139, after expiry of one month from the date on which he was served with a notice under sub-Section (2) of Section 142 or after completion of assessment whichever is earlier. In this regard, we also draw strength from the decision relied upon by the ld DR in the case of CIT Vs British India corporation 337 ITR 64 (All) wherein it was held as under: "Section 124 of the Income-tax Act, 1961-Assessing officer- Jurisdiction of- Assessment year 1974-75- Where Income-tax Officer, had jurisdiction when assessment proceedings commenced and a draft assessment order was submitted to IAC, subsequent change in jurisdiction, if any, unless brought to notice of authority concerned, would not in any manner vitiate assessment order passed by such ITO in absence of any objection with regard to lack of jurisdiction by assessee [In favour of revenue]. The Hon'ble Delhi High Court in the case of Abhishek Jain Vs ITO (2018) 94 taxmann.com 355 (....
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.... -2(3), Jaipur who had recorded the reasons for reopening, therefore, it cannot be held that reasons were recorded by wrong jurisdictional officer. The assessee is estoped from challenging the jurisdiction of the A.O. when assessee himself submitted to the jurisdiction of ITO Ward 2(3), Jaipur. The ld. CIT(A) has thus passed a well reasoned speaking order after evaluating all the facts and legal proposition on this ground, therefore, we find no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A). Hence, we uphold the same. Both these grounds of assessee stand dismissed. 11. Ground No. 3(a) to 3(c) of the appeal raised by the assessee relates to challenging the order of the ld. CIT(A) in upholding the proceedings U/s 147 of the Act. The ld AR appearing on behalf of the assessee has submitted that the ld. CIT(A) has erred in upholding the proceedings U/s 147 of the Act, as the reasons recorded in the present case was by non-jurisdictional A.O., therefore, the said A.O. had no jurisdiction upon the assessee. The ld AR has also relied upon the written submissions submitted before the ld. CIT(A), which is as under: 1. At the outset, it is subm....
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....ts for this purpose: Commissioner of Income-tax, Delhi vs. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) "AO can reopen the assessment only if there is tangible material to come to the conclusion that there is escapement of income. Reopening cannot be done on change of opinion only. The AO does not have power to review and has power only to reassess." Oriental Insurance Company vs. Commissioner of Income Tax (2016) 130 DTR (Del) 64 "It is well established that reasons to believe that income had escaped assessment is a necessary precondition for the AO to assume jurisdiction. Clearly it would be difficult to sustain that this precondition is met if such reasons to believe that income of an assessee has escaped assessment are based on palpably erroneous assumptions. The reason to believe must be predicated on tangible material or information." 4. In view of the aforesaid it is submitted that the very foundation/basis adopted for issuing the impugned notice u/s 148 of the Act dated 30.03.2017 is illegal and bad in law as no reasons were recorded in the said notice while initiating the assessment/re-assessment proceedings u/s 148 of the A....
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.... in support of the aforesaid objections places reliance on following judicial pronouncement for this purpose: Income Tax Officer & Ors. Vs. Lakhmani Mewal Das (1976) 103 ITR 437(SC) "The reason must be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section.......The words of the statute are "reason to believe" and not "reason to suspect". 7. In view of the above, at most there can be reasons to suspect on the basis of the information obtained by the Ld. AO trough AIR/CIB and thereafter enquiry could have been initiated, which is general in nature and initiating proceedings u/s 147 of the Act on the basis of suspicion is not permissible under the law and the same cannot constitute 'reason to believe' that income chargeable to tax of the Appellant has escaped assessment'. * Provisions of Section 147/148 cannot be invoked for making fishing and roving inquiries 8. It is submitted that for invoking the provis....
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.... has income that has escaped assessment. The information of AIR could be basis of 'reasons of suspicion' but mere information of AIR cannot be called as 'reasons to believe'. For the said view reliance is placed on the following judgements: Sh. Ashwani Kumar v. Income Tax Officer (ITA No. 129 (Asr)/2015) "The facts are not disputed. A bare perusal of the reasons recorded for issuance of notice u/s 148 of the Act, shows that the only material available before the AO was the AIR information of the assessee having deposited an amount of Rs. 11.60 lakhs in his savings bank account. Remarkably, the reasons recorded did not even mention the bank in which such savings bank account was maintained. The assessee, as available from the first page of the assessment order, was issued a notice u/s 148 of the Act, in pursuance to the aforesaid reasons. The assessment order under section 143(3) of the Act is dated 25.03.2013. The assessee had filed the return of income on 05.10.2005 and it had been stated in response to the notice u/s 148 of the Act that this return be treated as having been filed in response to this notice. In 'Bir Bahadur Singh Sijwali' (supra), like in....
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....gly proceedings u/s 147 of the Act is invalid. 12. On the other hand, the ld DR has relied on the orders of the authorities below and also relied on the following judicial pronouncements: (i) Ankit Agrochem P Ltd. Vs JCIT 253 Taxmann 141 (Raj) (ii) Calcutta Discount Co. Ltd. 411 ITR 191 (SC) (iii) GKN Driveshaft (India) Ltd. Vs ITO (2002) 259 ITR 19 (SC) 13. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. Although, we have dismissed grounds No. 1 and 2 of appeal raised by the assessee by holding that there was no fault of jurisdiction in the notice issued by the A.O. U/s 148(1) of the Act, however while dealing with the present grounds and after evaluating the facts of the present case, we found that the reasons recoded by the ITO Ward-2(3), Jaipur are based on wrong and incorrect facts while recording the said reasons it was categorically mentioned by the A.O. that the assessee had not declared capital ....
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....f the Act. 16. Grounds No. 4 and 5 (a) to 5(c) of the appeal raised by the assessee are interrelated and interlinked and relate to challenging the order of the ld. CIT(A) in upholding the additions U/s 50C of the Act, therefore, we have decided to adjudicate these grounds by this consolidated order. The ld AR of the assessee reiterated the same arguments as were raised before the ld. CIT(A). Ld AR further submitted that ld. CIT(A) was not justified in upholding the impugned addition as the ld. CIT(A) had erred in taking cognizance of the report of the DVO in considering the valuation made by the DVO in its report. It was further submitted that ld. CIT(A) also erred in not considering the objections of the assessee against the report of the DVO and not providing adequate opportunity of being heard to the assessee. The ld AR also relied on the written submissions filed before the ld. CIT(A) as well as before the ITAT. The submissions of the assessee according to the written submissions before this Bench are reproduced as under: 01.Agreement to sale two ancestral immovable properties were executed in FY 2004-05 and due to some dispute, sale deeds were executed in FY 2009-1....
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....ct should not be used against the Appellant to deny the benefit. 07. The facts of the Appellant case are very much similar to facts of Sanjeev Lal v. Commissioner of Income-tax, Chandigarh [2014] 365 ITR 389 (SC) and also the judgment of Hon'ble ITAT Vijag bench in the case of Moole Rami Reddy vs. ITO ITA No. 311/Vizag/2010 and M/s. Lahiri Promoters Visakhapatnam vs. ACIT, Circle-1(1) Visakhapatnam I.T.A. No.12/Vizag/2009. 08. It is humbly submitted that where agreement to sale is entered and part consideration is received as advance payment, and later sale deed is executed/registered on account of reasons beyond the control of the assessee or not, then transfer of property shall be said to have taken place in the year in which the agreement to sale was entered for the purpose of applying Section 50C(1) and taking stamp valuation. Brief rebuttal of the Appellant against the arguments of Ld. DR on issue of addition of Rs. 3,28,35,754/- u/s 50C of the Act. 09. During the hearing, the Ld. relied upon findings of CIT(A) in the appellate order, wherein existence of prior agreement to sell with respect to the properties has merely been doubted and alle....
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.... at the time of fixation of consideration, thus, having regard to this bench judgment in case of Indexone Tradecone (P.) Ltd. vs. Deputy Commissioner of Income-tax, Central Circle- 2, Jaipur IT Appeal No. 470 (JP.) of 2018, the said basis is not justified to deny benefit of taking stamp duty valuation considering DLC rates of FY 2004-05 for the purpose of section 50C, thus, return filed by Appellant deserves to be accepted. I. Written Submissions on issue of taking cognizance of report of DVO, considering the computation/valuation made by the Ld. DVO in its report, not considering the objections of the Appellant against Ld. DVO report and not providing adequate opportunity of being heard to the Appellant. 14. During assessment, the Appellant objected to stamp valuation as on the date of sale deed by Ld. AO on account of two factors, first disputed property, second, prior agreement to sale. The Ld. AO passing the impugned Order and rejected the explanation of the Appellant arbitrarily by saying that there is no provision in the law to consider stamp duty as on date of agreement. The Ld. AO referred the matter to DVO after passing of impugned assessment order, there....
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.... of notice from DVO, the Appellant sought time to file its objections as notice was received after date of hearing mentioned in the said notice and details, the same was not allowed. Further, objections of the Appellant filed on 30.04.2018 wherein opportunity of person hearing was also sought, but the same was not granted. Thus, these aspects and objections, were also not considered neither by the Ld. DVO nor by Ld. CIT(A), therefore, there has been violation of principle of natural justice and accordingly, no adequate opportunity of being heard was given. 20. In view of the above, Ld. CIT(A) was not justified in sustaining the impugned addition based on invalid DVO report and thus, the same deserves to be deleted. 17. On the other hand, the ld DR has relied on the orders of the authorities below. 18. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. After evaluating the facts, we found that the A.O. passed provisional orde....
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....istrict Valuation Officer." 19. Although, the ld DR has submitted that by making reference U/s 50C(2)(b) of the Act while passing the order of assessment, the limitation U/s 153 of the Act has been extended by the A.O. but, we are not inclined to accept the argument of ld. DR as Section 153 specifically does not exclude period of reference u/s 50C of the Act. Thus, we are of the view that what cannot be done directly cannot be done indirectly. Ld DR could not bring on record any contrary decision or position of law to our notice to counter the judgment relied upon by the ld. AR of Hon'ble Gujrat High Court in the case of Darshan Buildcon vs ITO (supra), therefore, under the circumstances while following the decision of Hon'ble Gujrat High Court in the case of Darshan Buildcon vs ITO (supra), we hold that the assessment order passed by the A.O. and upheld by the ld. CIT(A) is liable to be set aside as there cannot be any provisional assessment order under the income tax law. 20. Now while dealing with upholding of addition U/s 50C of the Act is concerned, it is clear from the record that the DVO report was received after assessment which makes valuation as per stamp duty valui....
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....sold through prior agreement dated 18/09/2004 and 19/07/2005 whereby total amount of Rs. 11.00 lacs received which is further supported by agreement to sell which is available at page Nos. 52 to 56 of the paper book. Similarly, another sale deed available at page Nos. 18 to 24 of the paper book clearly mentions the fact of dispute being resolved though court order dated 18/08/2009 and prior agreement to sale in subsequent para of the said sale deed which is at page No. 19 of the paper book. Thus, in our view, the ld. CIT(A) at page No. 52-53 of its order also recorded an incorrect finding that there is no mention of any prior agreement to sell in the deed despite the fact that the reference of prior agreement is clearly mentioned at page No. 2 of the sale deed. Further doubting on existence of agreement to sell is also not justified as no addition can be sustained merely on suspicion. The fact that the assessee received advance payment of Rs. 11.00 lacs in F.Y. 2004-05 and 2005-06 is undisputed. However, merely receipt of advance payment in cash and doubt on reliability of agreement to sell without any valid basis does not justify addition. 23. As far as issue of receipt of c....